NCPA - National Center for Policy Analysis

Odd Taxes

January 13, 2003

Like it or not, taxes are a fact of life. From paycheck deductions to the added cost of eating out, it's the price we pay for social programs, highway maintenance and public schools. As states scramble to fill budget deficits, they sometimes must find alternative taxing schemes.

Here are some of the stranger taxes:

Seventeen states, including Alabama and North Carolina, tax people involved in illegal drug transactions, from use to possession to distribution and sales. The rate varies according to the substance

  • In Alabama, marijuana is taxed at $3.50 a gram (other tax values are determined from the marijuana tax values -- if a gram of cocaine, for example, costs 10 times what a gram of marijuana costs, then cocaine would be taxed at 10 times the tax for marijuana, or $35 a gram.)
  • In North Carolina, within 48 hours of obtaining a fixed quantity of illegal drugs or alcohol, buyers must purchase stamps from the state and affix them to the controlled substance.

If the person gets busted without stamps, they still must pay the tax.

  • Since the law was enacted in 1990, just 63 people have purchased drug stamps -- many are believed to be collectors.
  • Meanwhile, the state has assessed some 60,000 fines for failure to display the stamps, collecting nearly $68 million in revenue to date.

Cities and states also levy taxes on the income earned by athletes, entertainers, and their various entourages. Any money earned while playing in that particular city or state gets taxed.

Cincinnati just passed a jock tax two weeks ago of 2.1 percent, intended to help close a $35 million city deficit. Today, every state with a professional sports team and an income tax has a jock tax.

Other odd taxes include:

  • Alabama's 10-cent tax on decks of cards that contain "no more than 54 cards".
  • Chicago's 0.5 percent charge on all carryout food, technically called the "anti-litter" tax.
  • Chicago's 9 percent "fountain soda drink" tax - levied on any soft drink not from a can or bottle.

Source: Annelena Lobb, "Strangest State Tax Laws," CNN/Money, January 7, 2003.

 

Browse more articles on Tax and Spending Issues